You notice that Coca-Cola has a stock price of $ 41.42 and EPS of $ 1.74. Its competitor PepsiCo has EPS of $ 4.04. But, Jones Soda, a small batch Seattle-based soda producer has a P/E ratio of 33.9. Based on this information, what is one estimate of the value of a share of PepsiCo stock?

The estimate value of share of PepsiCo stock is $96.152

Explanation:

Given,

Stock Price of Coca - Cola (MPS which is Market Price per share) is $41.42

EPS (Earnings Per Share) is $1.74

Putting the values in the P/E ratio, for computing the P/E ratio as:

P/E ratio = MPS / EPS

= $41.42 / $1.74

= 23.80

Jones Soda P/E ratio is 33.9

PepsiCo stock EPS is $4.04

Computing the estimate value of share of PepsiCo stock is as:

Value of share pepsico stock = EPS * P / E ratio

= $4.04 * 23.80

= $96.152